In New York, Chapter 11 bankruptcy can be used to help a business reorganize itself. In this case, a company called Momentive claimed $2.69 billion in assets and $4.17 billion in debt as it filed for Chapter 11bankruptcy in April 2014. The company hasn’t had an annual profit since it was bought by Apollo in 2006, according to data from Bloomberg.
Momentive Performance Materials Inc may not be a name you know, but you may have come across its products. The news reports that the company makes silicones and quartz products and is owned by Apollo Global Management LLC. It has recently won approval through the courts that will allow its plan to go to a creditor vote.
What does this mean for the company as it tries to work to pay down its debt? The article states that the current plan states that Apollo and an ad-hoc committee of noteholders, would get nothing. That isn’t sitting well with the noteholders, because they believe that their debt should be treated equally to the second-lien noteholders. Some of the lowest-tier noteholders include Blue Mountain Credit Alternatives Master Fund LP and Aurelius Capital Partners LP. The plan that the company wants to put into place would cut down around $4 billion in debt to an amount as small as $1.3 billion, less than half of what the company is said to owe.
The company Momentive is also disputing some debts that the two other classes of noteholders have said they are owed. Momentive believes that it does not owe those noteholders special premiums based on unpaid interest, and with the proposed plan, the noteholders will be repaid in full without interest.
Source: Bloomberg, “Momentive Can Send Bankruptcy Plan Terms to Creditors” Tiffany Kary, Jun. 19, 2014by